Funding, use remain topics of debate surrounding state’s disaster contingency fund

Tornadoes had never been recorded in Minnesota in the month of December, until several whipped through the southeastern portion of the state on Dec. 15, 2021.

While unique, this weather event and the damage it left behind, was a perfect example of why the state has a disaster contingency account that can quickly get aid to areas that need help to recover and rebuild.

The House Industrial Education and Economic Development Finance and Policy Committee heard a presentation Wednesday on the Disaster Assistance Contingency Account from the state’s top emergency manager.

Several members noted the apropos timing, as one day earlier Gov. Tim Walz issued an emergency declaration to assist eight counties in southeastern Minnesota in recovering from that December tornado and the accompanying heavy rain and ice storms.

Joe Kelly, director of Homeland Security and Emergency Management, said the last two years have been very active for natural disasters in the state, with 17 state disaster declarations in 40 counties, totaling $26.5 million in damage.

In his presentation, Kelly noted the state covers 75% of eligible recovery and rebuilding costs from the disaster account, with local governments covering the remaining 25%.

The disaster account was created in 2014 to provide immediate disaster response funding without further legislative action. Prior to its creation, the Legislature would need to convene every time a disaster was declared, often in a special session, to appropriate money toward response efforts.

Governors have declared 58 disasters since the account creation, and the fund has paid out $108.5 million in that time. Kelly said the current balance stands at $29.5 million.

“This account has worked exactly the way the Legislature intended since its creation,” Kelly said. “The governor has not had to call the Legislature into session for disaster relief.”

Funding the account has become political

Rep. Gene Pelowski Jr. (DFL-Winona), the committee chair, lamented that the disaster fund has become political, such as last year when members debated whether disaster assistance money could be used to rebuild properties damaged during the civil unrest in Minneapolis following the 2020 murder of George Floyd.

Republicans said then the intent is the fund should only be used for natural disasters, and not for fires and other damage resulting from human actions.

Pelowski is also frustrated with a 2021 law tying a $30 million appropriation to the health of the state budget, specifying that money would only be transferred from the General Fund to the disaster account if the state had a budget surplus. The amount was transferred in September 2021.

Pelowski wishes the Legislature would create a funding mechanism to automatically replenish the disaster fund each year, thereby eliminating such political entanglements.

Until that happens, he said he would team up with Sen. Julie Rosen (R-Vernon Center), as he did last year, to sponsor bills that would fund the account for fiscal year 2023. He also noted that perhaps more money might be needed due to the trend of more natural disasters occurring each year.

More on the contingency fund

The idea of a contingency account to accommodate emergencies originated in May 2011 when the Legislative Audit Commission directed the Office of the Legislative Auditor to evaluate how the state helps communities recover from natural disasters.

A March 2012 report concluded, “The Legislature should determine under what circumstances state recovery funding should be made available for disasters that do not receive FEMA aid via presidential declarations. If it does so, it should consider a dedicated account to fund initial recovery for such disasters.”

[MORE: Read about the contingency fund in Session Daily]

The Legislature created the account in 2014, after seven special sessions for flood relief took place between 1997 and 2013.

First funded with $3 million, the contingency account has been supported each biennium since, with amounts ranging from $5.4 million to $30 million. Since 2014, $138 million has been transferred from the General Fund into the account.